IBM buys Cast Iron for cloud computing integration

Can the data integration specialists avoid getting lost in the Big Blue Sea and become part of IBM's cloud strategy?

IBM has snapped up data integration specialist Cast Iron for an undisclosed sum. The nine-year-old venture-backed software firm focuses on linking enterprise data and business processes to Software as a Service (SaaS) providers.

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IBM said in a press conference at its IMPACT 2010 event that the move was designed to augment IBM's own in-house application integration capabilities with external service providers, also noting that integration and middleware were crucial to its strategy as cloud computing continues to grow in the enterprise.

"We have the broadest and deepest portfolio for inside the enterprise. We connect SAP to Oracle and Oracle to SAP better than anyone -- Cast Iron does the inter-enterprise better than anyone else," said Steve Mills, senior vice president for software development at IBM.

Mills said Cast Iron complemented IBM's capabilities within the enterprise and would jump start IBM's ability to sell to enterprises that already had or wanted to look at complex software services. He said that integration was top of mind for enterprise IT.

The importance of integration "Integration is clearly a top-three worry," said Jeff Kaplan, principal analyst at THINKstrategies.

He said research was clear; enterprises want to know that they can take information they already have and use it, cost effectively, with a service provider.

"Once you get past security and reliability, the next most practical issue that you have to deal with is integrating your enterprise data," he said.

Kaplan wasn't surprised by the move. He said that data integration products are taking off as organizations turn to SaaS. Cast Iron has been in a horserace with competitors like Informatica, Boomi, Hubspan and others, to deliver the crucial link between an enterprise's business processes and cheap, scalable and easily managed SaaS offerings, said Kaplan.

Cast Iron enjoyed several advantages over competitors in IBM's eyes, according to Kaplan. Not only did it have a portfolio of large enterprise customers, it had an inside track with Salesforce.com, the leading SaaS vendor, as Salesforce.com's preferred integration vendor.

Once you get past security and reliability, the next most practical issue that you have to deal with is integrating your enterprise data.

Jeff Kaplan, principal analyst at THINKstrategies

Cast Iron CEO Ken Comee said the benefit to customers was that SaaS providers used the same approach for every customer.

"We understand their most common applications," he said. Cast Iron supports all the major platforms, like Salesforce.com, Taleo.com and NetSuite.

When a provider closes a deal, he said, Cast Iron already understands what will happen when the customer attempts to marry its IT to a service.

"Every time they go to a new customer, we're not re-inventing the wheel," he said.

"They've built a very broad ecosystem of cloud providers," said Craig Hayman, general manager for IBM's WebSphere line.

Hayman said there were no plans to trim down that ecosystem in favor of some SaaS providers over others. He said IBM didn't need to discourage that kind of competition, since Cast Iron worked equally well across the board.

THINKstrategies' Kaplan said that while the move looks good on paper for IBM, there's always the danger of losing momentum after an acquisition by the IT giant. While the buy signals the long-term viability of Cast Iron's software, current customers may feel a pinch as progress slows and the 75-employee company is absorbed into IBM's organization. New sales may lose momentum, and there's always the possibility that customers will turn elsewhere during the transition period.

"It all depends on how well and how quickly they can adjust without killing the golden goose, if you will," said Kaplan.

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